Vision Scenario EU-25

8/8/2019 Vision Scenario EU-25

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The Vision Scenario

for theEuropean Union

Project sponsored by

Greens/EFA Groupin the European Parliament

Berlin, November 2006

ko-Institut e.V.

Berlin OfficeNovalisstrae 10D-10115 BerlinTel.: +49-(0)30-280 486-80Fax: +49-(0)30-280 486-88

Freiburg HeadquatersMerzhauser Strae 173D-79100 Freiburg i.Br.Tel.: +49-(0)761-45295-0Fax: +49-(0)761-45295-88

Darmstadt OfficeRheinstrae 95D-64295 DarmstadtTel.: +49-(0)6151-8191-0Fax: +49-(0)6151-8191-33

www.oeko.de

International Consulting on Energy

(ICE)6 rue de VerdunF-93 450 L'Ile-Saint-DenisTel.: +33-(0)1-49 22 00 64Fax: +33-(0)1-49 22 00 66

Dr. Felix Chr. Matthes

Sabine GoresVerena Graichen

Julia Repenning

Dr. Wiebke Zimmer

in cooperation with

Sverin Poutrel

(ICE International Consulting on Energy)


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Vision Scenario EU-25 ko-Institut

Summary

Energy and climate policy in the 21st century is facing manifold and far-reaching chal-lenges:

The problem of global climate changes requires fast and significant reductionsin greenhouse gas emissions to stabilise the concentrations of these gases at alevel which is sufficient to limit the increase of the global mean temperature toa level not exceeding 2C above the pre-industrial levels;

Finite fossil and nuclear fuel resources and the foreseeable concentration of fuelproduction in some politically sensitive regions is increasingly highlighting theproblem of energy security;

The integrated world energy markets and liberalised energy markets are in-creasingly facing the problem of highly volatile energy prices, which leads to

an increased vulnerability of economies.

Against the background of these challenges, a business-as-usual approach in energypolicy is increasingly being seen as no longer acceptable. However, there is no silverbullet for solving the majority of the problems that energy and climate policy is facingtoday. Many options must be explored and it will be necessary to implement many op-tions.

Risk minimisation is the key strategic approach to meeting the various challenges. Theproven advantages for the options to be used must be greater than the risks and the un-certainties connected to these options.

There is a wide consensus about some options which can be seen as favorable for en-ergy-related activities:

There is huge potential for energy efficiency in the end-use sectors as well as inthe energy sector which can be exhausted in all sectors to a much wider extentthan it can be assumed in the business-as-usual case;

Renewable energies must play a key role in the future energy system, in powerproduction, heating and cooling as well as in the transport sector.

In addition to these options, there is another emerging technology which could play a

role in the medium term: Carbon capture and storage could contribute significantly to future CO2 emis-

sion reduction; however, many scientific, technological and economic problemsmust be solved, the regulatory framework for this technology is predominantlylacking, and public acceptance is crucial for this technology pathway.

Besides the matured and consensual, and the emerging and potentially consensual, op-tions for the development of a future energy system, the debate is affected by a strongcontroversy:

There is no foreseeable consensus on the acceptability of nuclear power against

the background of the possibility of large nuclear accidents and the manifold

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ko-Institut Vision Scenario EU-25

problems related to the handling of nuclear materials (from mining to processingof nuclear materials and the management of nuclear waste).

Scenario design and results

To illustrate the potentials of the non-controversial emission reduction options, a sce-nario analysis was carried out to analyse the implications and interactions of differentoptions:

The business-as-usual scenario (baseline scenario) indicates a developmentwhich could result if recent energy and climate policies are not strengthened;

The vision scenario is a normative scenario based on two main assumptions:

o All non-controversial greenhouse gas mitigation options should be used

for the time horizon of 2030 so that an emission reduction of 30% can bereached by the year 2020 compared to 1990 levels and a significantlyhigher reduction after this date;

o The use of nuclear power should be phased out based on the existingphase-out policies of different Member States of the EU or a technicallifetime of 40 years; in other words, no significant lifetime of existingnuclear power plants should be assumed and no new investments in nu-clear power should be taken into account.

Figure 1 Greenhouse gas emissions in the business-as-usual case and emissionreductions, 1990-2030

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1990 1995 2000 2005 2010 2015 2020 2025 2030

GtCO2e

CO2

CH4

N2OHFC, PFC & SF6

Nuclear phase-out w/o add'l P&M

Emission reduction

30% reduction (compared to 1990 levels)



Sources: EEA, Member States inventory reports, ko-Institut.

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Figure 1 illustrates the past emission trends and the different emission pathways underthe two scenarios. In the baseline scenario, total greenhouse gas emissions of the EU-25will reach 1990 levels between 2010 and 2020 and will only moderately decrease againby the year 2030. If the level of nuclear power production is not maintained at a level of

85% of the 2000 level as is assumed in the baseline scenario and no further policies andmeasures are implemented, the total greenhouse gas emissions of the EU-25 couldamount to 5% above the level of 1990 or 11% above the level of 2000.

In the vision scenario, total greenhouse gas emissions can be reduced by 31% by theyear 2020 and 40% by the year 2030, compared to 1990 levels. Although measures forall greenhouse gases were considered, the main emission reductions stem from CO2,which is still by far the main source of greenhouse gas emissions.

Figure 2 Greenhouse gas emission reductions in the vision scenario,1990-2030

3,000

3,500

4,000

4,500

5,000

5,500

1990 2000 2010 2020 2030

MtCO2e

Reduction of other greenhouse gas emissions

Renewables in transport

Efficiency in aviation

Car efficiency

Modal shift in transport

Renewables in tertiary sectors

Efficient heating & cooling in tertiary sectors

Efficient use of electricity in tertiary sectors

Renewables in households

Efficient heating & cooling in households

Efficient use of electricity in households

Renewables in industry

Efficient fuel use in industry

Efficient use of electricity in industry

Energy use in other energy sectors

Renewables in power production

CHP & fuel switch in the power sector

CCS for new lignite, hard coal and gas*

Other GHG

Transport

Tertiary

Households

Industry

Power

& Energy

(*add'l option)

Sources: EEA, Member States inventory reports, ko-Institut.

Figure 2 shows the breakdown of the resulting emission reductions in the vision sce-

nario by sectors and measures. The power sector is the main source of CO2 emissions in the EU-25, mainly be-

cause of the high share of coal consumed in this sector, and represents the mainpotential for emission at the same time. The sector represents 36% of the emis-sion reductions by 2030, two thirds of this by measures in the sector (CHP, fuelswitch from coal to gas and power production from renewable energies) and onethird as a result of a more efficient use of electricity in other sectors;

owing to its strong growth dynamics, the transport sector (for which all green-house gas emissions from aviation were included in the scenario analysis) con-

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stitutes the second most important contribution to emission reductions, makingup about 20% by 2030;

the residential sector, which is mainly characterised by energy consumption by

buildings contributes a share of 15.5% to the total emission reductions by theyear 2030;

measures to reduce non-CO2 greenhouse gases play an important role in the vi-sion scenario and contribute 14% to the overall reduction by 2030;

industry (8%), tertiary sectors (7%) and other energy industries (2%) also play asignificant role in the total reduction of greenhouse gas emissions;

if carbon capture and storage from large condensation power plants were com-mercially available as of 2020 for the plants to be built, the emission reductionby 2030 could increase by an additional 100 Mt CO2, which equals 5% of the to-

tal emission reduction by all other measures listed above.In total, the contribution of renewable energies amounts to 24%, the increasing use ofCHP and fuel switch in the power sector to 11%, the reduced consumption of electricityto 12%, the more efficient heating and cooling in the end-use sectors to 21% and theeffects of modal shift and a more efficient transport sector to 17% of the total emissionreduction achieved by the year 2030.

Against this background, policies and measures with regard to the power sector, a moreefficient use of electricity, the building sector and the full range of potentials in thetransport sector should be seen as those with the highest priorities.

Key findings

The total primary energy supply increases by about 17% in the baseline scenario in theperiod from 2000 to 2030, whereas in the vision scenario the primary energy consump-tion is reduced by 13% in this period (Figure 3).

The level of nuclear power production is maintained at a level of 15% belowthe 2000 levels in the baseline scenario and shrinks by 85% in the vision sce-nario.

The consumption of gas in the EU-25 would be 32% higher in 2030 compared to2000 in the baseline scenario and is decreased by 9% compared to the 2000 lev-els in the vision scenario, mostly as a result of the higher efficiency in buildings.

The use of (fossil) oil in the baseline scenario expands by another 5% by 2030,whereas it can be reduced in the vision scenario by 39% in the same period.

The total use of coal, which is almost stable in the baseline scenario, is reducedby 63% by 2030 in the vision scenario.

Although the contribution of renewable energies increases by the factor of 2.6 inthe period from 2000 to 2030, the share of total primary energy supply is still

only 13% in 2030 in the baseline scenario. In the vision scenario, the contribu-

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tion of renewable energies amounts to 39% of the total primary energy supply in2030.

Figure 3 Total primary energy supply in the baseline and the vision scenario,1990-2030

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2010 2020 2030 2010 2020 2030

1990 2000 Baseline Vision

Mtoe

Biomass & Waste

Solar & Geothermal

Wind

Hydro

Gas

Oil

Hard coal

Lignite

Nuclear

Sources: Eurostat, ko-Institut.

Energy security benefits from climate change policy

The major differences in the structure of primary energy supply lead to significantchanges in the role of energy imports to the EU-25. In 2000, the share of imported ener-gies amounted to about 60%. In the baseline scenario, this share rises to 74% in 2030.In the vision scenario, the share of imported energies decreases to 49% in the same pe-riod, assuming that all bioenergies are supplied from EU-25 sources. If a significant roleis assumed for international trade with regard to biomass and biofuels, the total share ofenergy imports in the vision scenario is slightly higher (53% in the case of 15% bio-energy imports).

As a summary of the results on import dependence, the vision scenario delivers a majorcontribution to a decreased dependence on import by means of diversification towardsother energies and energy savings. Thus, the economic vulnerability of the EU-25seconomies to price spikes and volatilities on the global energy markets is significantlylower.

The generation of electricity and the production of district heat is the most significantsector in the EU-25s energy system with regard to both energy consumption and CO2emissions.

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Figure 4 Net electricity generation in the baseline and the vision scenario,1990-2030

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2010 2020 2030 2010 2020 2030


TWh

Biomass & Waste

Geothermal

Solar

Wind

Hydro

Gas

Oil

Lignite & brown coal

Hard coal

Nuclear


In the baseline scenario, the power production follows the steady growth of electricityconsumption in the different sectors in the period from 2000 to 2030, which results in apower production that is 50% higher in 2030 compared to the 2000 levels (Figure 4). In

the vision scenario power consumption (and production) can be stabilised at 7% abovethe levels in 2000 by the year 2030.

The replacement of inefficient electric appliances and installations leads to amuch lower demand for electricity production.

The production of nuclear power plants decreases by 15% in the baseline sce-nario by 2030 and shrinks by 85% in the vision scenario.

The electricity generation from hard coal increases by 38% and from lignite by11% in the baseline scenario, whereas in the vision scenario power production

from lignite decreases by 36% and from hard coal by 71% in the period from2000 to 2030.

The production of gas-fired power plants almost doubles in the baseline scenarioby 2030 and increases by 55% in the vision scenario.

The power production from renewables is extended by a factor of 3 and repre-sents a share of 29% in 2030 in the baseline scenario, whereas it increases by afactor of 4.4 in the vision scenario, equalling a share of renewable energies ofthe total power production of 44% in 2020 and 59% in 2030.

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It is also worth mentioning that the share of combined heat and power (based on bothfossil fuels and biomass) represents 32% of the total power generation in the vision sce-nario by the year 2030.

In the vision scenario, the power sector is, against this background, facing a fundamen-tal transition towards renewable energies and towards fossil power generation that ismore efficient or less CO2-emitting.

The implementation of an energy and climate policy framework which has a develop-ment outlined by the vision scenario as its goal requires some key activities. These are:

1. A strong focus on energy efficiency measures

for appliances and installations consuming electricity in all sectors (house-hold equipment, motors, pumps, etc.);

for improvement of buildings (heating and cooling) for both new buildingsand the renovation of the existing building stock so as to reach low energy orpassive house standards in the period up to 2030;

for the substitution of electric appliances for low temperature heating pur-poses;

implementing ambitious performance standards for cars and car fleets.

2. A strong focus on changing the modal split targeting public and rail freighttransport

with comprehensive efforts to avoid transport;

with a consequent liberalisation approach to the railway system and majorsystem investments to strengthen the competitiveness and the infrastructureof rail transport and sustainable modes of transports in cities;

with measures to establish a level playing field between the different modesof transport, e.g. by removing the tax advantages for kerosene and jet fuelsfor aviation.

3. Ambitious efforts to increase the share of renewable energies in both the energyand the end-use sectors

to set a share of about 20% in the end-use sectors by 2030 as the target; to reach a share of about 45% by 2020 and 60% by 2030 of the electricity

production.

4. Securing the necessary investments in the energy infrastructure

to integrate a large share of power production from fluctuating, decentral andoffshore sources;

to develop the necessary infrastructure for heat networks which constitute anessential element for many options of biomass use and CHP;

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to improve the networks and the storage facilities for the EU-25 wide supplyof natural gas, mainly in Central and Eastern Europe;

to secure the supply of biofuels in the range indicated above.

5. Implementation of effective political instruments

strengthening the EU ETS to develop it as an instrument of effective carbonpricing for new investments and the operation of existing plants and intro-ducing ETS as an instrument for lowering the greenhouse gas emissionsfrom aviation;

to support CHP as a key technology for using hydrocarbons as well as bio-mass with the highest efficiency possible;

to reach ambitious performance standards for energy consumption of electricappliances and installations and of buildings as well as cars in the frameworkof the internal market;

to establish sufficient support schemes or standards for the significant pene-tration of energy production from renewable energies for power production,heating and cooling as well as the transport sector;

strengthening the EU energy market liberalisation and enforcing competitionfor the electricity market and especially for the gas market so as to enableaccess for new and efficient technologies and new players on the market;

to define a coherent EU gas strategy;

to push forward the technology of CCS and other emerging technologies inthe fields of renewable energies, energy efficiency and energy storage;

to address the full range of emission reductions achievable for non-CO2greenhouse gases in industry, agriculture, waste management and the energysector.

The vision scenario indicates a very ambitious pathway towards a sustainable energysystem. However, compared to the different dimensions of the baseline scenario interms of greenhouse gas emission, consumption of fossil fuels and the different aspectsof energy security, the vision scenario shows that a plethora of benefits can be created if

such a pathway forms the framework for the design of future energy and climate poli-cies.

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Contents

1 INTRODUCTION................................... ..................................................................... .............. 13

2 METHODOLOGICAL APPROACH............................................................ .......................... 15

3 TRENDS IN ENERGY SUPPLY AND GREENHOUSE GAS EMISSIONSIN THE EU-25 ............................................................... ............................................................. 17

4 MAIN DRIVER ECONOMIC AND DEMOGRAPHIC DRIVERS ..................................... 20

5 BASELINE AND VISION SCENARIO..................................... .............................................. 21

5.1 END-USE SECTORS...........................................................................................................21 5.1.1 Industry .............................................................. ............................................................ 21

5.1.2 Households................ ................................................................ ..................................... 235.1.3 Tertiary sectors ............................................................ .................................................. 255.1.4 Transport........................................ ................................................................ ................ 265.1.5 Total final energy consumption.......................... ............................................................ 285.2 ENERGY SECTORS............................................................................................................31 5.3 PRIMARY ENERGY SUPPLY AND CO2 EMISSIONS..............................................................36 5.4 TOTAL GREENHOUSE GAS EMISSIONS ..............................................................................40 5.5 THE EU-25 WEDGES........................................................................................................42

6 CONCLUSIONS AND POLICY RECOMMENDATIONS................................................... 44

7 REFERENCES...................................................................... ..................................................... 48

ANNEX............................................... ................................................................ ....................................... 49

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List of Figures

Figure 1 Greenhouse gas emissions in the business-as-usual case and emissionreductions, 1990-2030......................................................................................... 4

Figure 2 Greenhouse gas emission reductions in the vision scenario,1990-2030.............. 5Figure 3 Total primary energy supply in the baseline and the vision scenario,

1990-2030............................................................................................................ 7

Figure 4 Net electricity generation in the baseline and the vision scenario, 1990-2030..................................................................................................................... 8

Figure 5 Total primary energy supply by fuel in the EU-25, 1990-2004 ........................ 17

Figure 6 Greenhouse gas emissions in the EU-25, 1990-2004........................................ 18

Figure 7 Economic and demographic drivers for the scenarios, 1990-2030.................... 20

Figure 8 Final energy consumption by fuel in the EU-25 industry, 1990-2030.............. 21

Figure 9 Final energy consumption by fuel in EU-25 households, 1990-2030 .............. 23

Figure 10 Final energy consumption by fuel in the EU-25 tertiary sectors, 1990-2030................................................................................................................... 25

Figure 11 Final energy consumption by fuel in the EU-25 transport sectors, 1990-2030................................................................................................................... 28

Figure 12 Total final energy consumption by fuel in the EU-25, 1990-2030................... 29

Figure 13 Total final energy consumption by sector in the EU-25, 1990-2030 ............... 30Figure 14 Development of the existing capital stock for power generation in the

EU-25, 2000-2030............................................................................................. 32

Figure 15 Net electricity generation in the EU-25, 1990-2030.......................................... 34

Figure 16 Total primary energy supply in the EU-25, 1990-2030 .................................... 36

Figure 17 Primary energy imports to the EU-25, 1990-2030 ............................................ 38Figure 18 CO2 emissions from energy in the EU-25, 1990-2030...................................... 39Figure 19 Non-CO2 emissions in the EU-25, 1990-2030 .................................................. 40Figure 20 EU-25 greenhouse gas emission trends and reductions, 1990-2030 ................. 41Figure 21 EU-25 greenhouse gas reduction wedges, 1990-2030....................................... 42

List of Tables

Table 1 Scenario results final energy consumption, 1990-2030.................................. 49Table 2 Scenario results power production, total primary energy supply and

greenhouse gas emissions, 1990-2030............................................................... 50

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1 Introduction

Energy and climate policy in the 21st century is facing manifold and far-reaching chal-

lenges:

The problem of global climate changes requires fast and significant reductionsin greenhouse gas emissions to stabilise the concentrations of these gases at alevel which is sufficient to limit the increase of the global mean temperature toa level not exceeding 2C above the pre-industrial levels;

Finite fossil and nuclear fuel resources and the foreseeable concentration of fuelproduction in some politically sensitive regions is increasingly highlighting theproblem of energy security;

The integrated world energy markets and liberalised energy markets are in-creasingly facing the problem of highly volatile energy prices, which leads toan increased vulnerability of economies.

Against the background of these challenges, a business-as-usual approach in energypolicy is increasingly being seen as no longer acceptable. However, there is no silverbullet for solving the majority of the problems that energy and climate policy is facingtoday. Many options must be explored and it will be necessary to implement many op-tions.

Risk minimisation is the key strategic approach to meeting the various challenges. Theproven advantages for the options to be used must be greater than the risks and the un-

certainties connected to these options.

There is a wide consensus about some options which can be seen as favorable for en-ergy-related activities:

There is huge potential for energy efficiency in the end-use sectors as well as inthe energy sector which can be exhausted in all sectors to a much wider extentthan it can be assumed in the business-as-usual case;

Renewable energies must play a key role in the future energy system, in powerproduction, heating and cooling as well as in the transport sector.

In addition to these options, there is another emerging technology which could play arole in the medium term:

Carbon capture and storage (CCS) could contribute significantly to future CO2emission reduction; however, many scientific, technological and economic prob-lems must be solved, the regulatory framework for this technology is predomi-nantly lacking, and public acceptance is crucial for this technology pathway.

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Besides the matured and consensual, and the emerging and potentially consensual, op-tions for the development of a future energy system, the debate is affected by a strongcontroversy:

There is no foreseeable consensus on the acceptability of nuclear power againstthe background of the possibility of large nuclear accidents and the manifoldproblems related to the handling of nuclear materials (from mining to processingof nuclear materials and the management of nuclear waste).

Although is much consensus on the future role of energy efficiency, renewable energiesore potentially CCS in general many questions remain regarding the potential and thecontribution of the different options to the necessary transformation of the energy sys-tem. A key challenge of the debate is to identify the potential of these options and towhat extent the potential must be realised so that the overarching goals of climate pro-tection and energy security can be met at acceptable costs.

The purpose of the analysis presented in this paper is to analyse potential combinationsof the manifold options of energy efficiency and renewable energies as well as the shiftto low carbon fossil fuels and the medium-term option of CCS over time, to identify keychallenges and areas of action and to derive some technical and political conclusions.As a result of the analysis, a vision on the fundamental transformation of the energysystem should evolve to assess the outcome of recent policies and measures and to con-trast it with activities which go significantly beyond the business as usual. Special focuswas placed on the analysis of the relations between different technical or political meas-ures and their outcome in terms of greenhouse gas emissions as well as in terms of

changes in the final and primary energy consumption.Against this background, the analysis presented in this paper should be understood as acontribution to the necessary discussion on how and how quickly the energy system inthe European Union could be restructured so as to meet the challenges of climatechange, energy security and other dimensions of sustainable development.

Work on the study was conducted in a varied process of dialogue and fruitful discus-sions both within the project team and with the project sponsor, as well as with variouscolleagues from other institutions and organisations who delivered data and further in-formation which was extremely valuable given the time and resource constraints for this

study. For this extensive support the authors would like to express their thanks. Specialthanks go to Vanessa Cook from ko-Institut who worked on the English editing of thetext. Responsibility for the contents of the study naturally resides with the authors.

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2 Methodological approach

The analysis presented in this study is based on the scenario approach. The development

of scenarios offers the possibility of assessing the implications and interactions and thetotal effects of certain energy and climate policy strategies in a transparent manner. Theanalysis is based on two scenarios:

The business-as-usual scenario (baseline scenario) indicates a development thatcould result if recent energy and climate policies are not strengthened;

The vision scenario is a normative scenario based on two main assumptions:

o All non-controversial greenhouse gas mitigation options should be usedfor the time horizon of 2030 so that an emission reduction of 30% can bereached by the year 2020 compared to 1990 levels as well as a signifi-cantly higher reduction after this date;

o The use of nuclear power should be phased out based on the existingphase-out policies of different Member States of the EU or a technicallifetime of 40 years; in other words, no significant lifetime of existingnuclear power plants should be assumed and no new investments in nu-clear power should be taken into account.

The starting point for the development of the scenarios are the high efficiency and highrenewables scenarios presented by DG TREN (2006) in combination with some otherstudies on EU projections (EEA 2005, WI 2005). In a first step, these scenarios were

analysed and the baseline scenario was developed on the basis of the data and informa-tion given in the scenario report. In addition to the information which could deriveddirectly from the documentation, additional expert judgements were carried out to fillthe remaining data gaps.

All historic time series (for the years from 1990 to 2004) are based on data from Euro-stat (energy data) and from the European Environment Agency (EEA) and the NationalInventory Reports (NIR) from different Member States.

On the basis of the baseline scenario, a sectoral analysis was undertaken to analyse theimplication of the baseline scenario and to identify and quantify additional potentials

and options. The high efficiency and high renewable scenarios of DG TREN (2006)served as one of the guidelines for the extent to which additional measures could beassumed. In addition, the existing literature was explored and our own modelling exer-cises were undertaken.

The sectoral analysis was carried out in cooperation by ko-Institut and ICE Interna-tional Consulting in Energy:

ICE analysed the sectors industry, private households and tertiary sectors (ser-vices, agriculture, etc.);

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ko-Institut analysed the energy sectors, the transport sector, the non-energyand non-CO2 greenhouse gases and developed the model in which the resultsfrom the sectoral analysis were integrated in a consistent manner.

Different models were used for the analysis. For the end-use sectors, ICE used theirbottom-up model and modelling exercises. For the power sector ko-Instituts ELIASmodel1 was used and for the transport sector a simple assessment model was developedwithin the framework of this study.

The integration of the sector analysis was implemented by a simple energy balancemodel which can also be used to calculate the related total primary energy supply(TPES) and the energy-related carbon dioxide (CO2) emissions.

The development of the scenarios for the non-energy and non-CO2 greenhouse gaseswas based on existing literature and additional expert judgments.

The analysis was carried out on an aggregate level for the European Union with 25Member States (EU-25). However, for some sectors the analysis is based on a moredetailed database which differentiates between the 15 old Member States (EU-15) andthe 10 new Member States (NMS-10).

If not otherwise indicated, the metrics of all calculations are in tons of oil equivalent(toe) or in billion kilowatt hours (TWh). Greenhouse gas emissions are expressed intons of carbon dioxide equivalent (t CO2e) for the non-CO2 greenhouse gases and therespective totals and in tons of carbon dioxide (t CO2) for the energy-related emissions.

1 The Electricity Investment Analysis Model (ELIAS) was developed to analyse the impact of differ-ent political instruments (which are modelled in much detail) on the investment decisions in the

power sector.

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3 Trends in energy supply and greenhouse gas emissions in the EU-25

The development of the total primary energy supply (TPES) of the EU-25 in the period

between 1990 and 2004 is characterised by two main trends (Figure 5):

The first years after 1990 show that the economic crisis had a significant impactin the new Member States and the eastern part of Germany which led to a slightdecrease in primary energy consumption. However, besides this special trend inthe eastern economies in transition, the TPES rose steadily. The total increase inprimary energy consumption amounted to 190 million tons of oil equivalent(Mtoe) which equals an increase of about 12%.

Significant changes in the structure of primary energy can be observed. Theshare of coal dropped and the role of natural gas expanded significantly. In 1990

the share of hard coal in the TPES was 20% and the share of lignite amounted to7.7%. By 2004, these shares decreased to 13.6% and 4.2%, respectively. Thecontribution of natural gas to the TPES increased from 16.7% to 23.9%. Onlysmall changes can be observed for the contribution of oil and nuclear energy.The highest growth rates are indicated by the renewable energies which supplied59% more primary energy in 2004 than in 1990. However, because of the lowbase level, the share of the TPES only increased from 4.4% in 1990 to 6.2% in2004.

Figure 5 Total primary energy supply by fuel in the EU-25, 1990-2004

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mtoe

Other Renewables

Wind & Solar

Hydro

Gas

Oil

Lignite

Hard coal

Nuclear


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In total, the increase in TPES was only partly compensated by the trend towards fuelswith lower carbon emissions which results in a significant increase of carbon dioxideemissions from energy use.

The level of greenhouse gas emissions in the EU-25 is dominated by the emissiontrends in the EU-15 Member States (Figure 6). However, the emissions decrease ofabout 5.4% in the period from 1990 to 2004 mainly results from developments in thenew Member States.2 Whereas the level of total greenhouse gas emissions in the EU-15Member States was 0.6% below the 1990 level in 2004, the emissions decreased in thenew Member States by about 26.3%.

A more detailed analysis of the developments in the EU-15 shows that the total decreaseof emissions in the period from 1990 to 2004 results from the significant decrease of thenon-CO2 emissions; CO2 emissions rose by approximately 4.4% from 1990 to 2004.The only other greenhouse gas which also shows an increasing trend is the group of

HFCs. The total emissions of HFS increased by about 87% in the period indicatedabove.

Figure 6 Greenhouse gas emissions in the EU-25, 1990-2004

0

1,000

2,000

3,000

4,000

5,000

6,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

MtCO2e

CO2 from international aviationSF6PFCsHFCsN2O -NMS-10N2O -EU-15CH4 - NMS-10CH4 - EU-15CO2 (w/o LULUCF) - NMS-10CO2 (w/o LULUCF) - EU-15

Sources: Inventory reports of the EU and Member States, ko-Institut.

2 It should be mentioned that in the framework of the first commitment period of the Kyoto Protocolsome Member States chose a different base year for all or some of the gases covered by the KyotoProtocol. Some of the new Member States chose a base year before 1990 and most of the EU-15Member States chose 1995 as the base year for the emissions of HFCs, PFCs and SF 6. However, forthe total EU-25 emissions, these different base years only have minor consequences for the totalemission reductions achieved by the year 2004. Last but not least, CO 2 emissions from land use,land use change and forestry (LULUCF) were not taken into account although some Member States

intend to do so for the first commitment period of the Kyoto Protocol.

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Furthermore, it is important to mention that CO2 emissions from international aviationare not included in the totals of greenhouse gas emissions reported under the UnitedNations Framework Convention on Climate Change (UNFCCC) and the Kyoto Proto-col. Against the background of the exceptional growth of aviation in the course of the

last decade,3 this exclusion of emissions from international aviation results in differentassessments on the progress made in emission reduction in the fourteen years between1990 and 2004:

If CO2 emissions from international aviation are taken into account, the totalgreenhouse gas emissions of the EU-15 increased by about 0.6% from 1990 to2004. If CO2 emissions from international aviation are not considered in theemission totals, the total greenhouse gas emissions decreased by 0.6% in this pe-riod.

The share of CO2 emissions from international aviation for the new Member

States is significantly lower. However, the total greenhouse gas emissionsdropped by 26.3% if international aviation is not included and by 26.0% if theseemissions are considered in the totals.

For the EU-25 the total greenhouse gas emissions decreased by 5.4% from 1990to 2004 if the emissions from international aviation are not considered. If thefast-increasing emission levels from international aviation are taken into ac-count, the total emissions only decreased by 4.3%.

The trends for the total level primary energy supply as well as for the structure of TPESand the CO2 emissions clearly indicate that major efforts will be needed to achieve ma-

jor emission reductions for CO2, the most important greenhouse gas, as well as to makerenewable energies constitute a significant share.

Last but not least, the share of fuel imports increased significantly for some energies. In1990 the share of imports in the total hard coal supply was 24% for the EU-25. By theyear 2004, this share expanded to more than 50%. Whereas the share of imported oilremained stable at a 79% level, the contribution of imported natural gas to the total gassupply for the EU-25 increased from 46.5% in 1990 to 54% in 2004.

Consequently, the import dependency of EU-25s energy system grew significantly.The total share of imported fuels in the TPES rose from 56.4% in 1990 to 64% by the

year 2004.4

3 The total CO2 emissions from kerosene and jet fuel increased in the EU-25 from about 90 to 145 MtCO2 in the period from 1990 to 2004.

4 In most of the official statistics, the share of imported fuels is lower than the data indicated above.The main reason for this is the fact that nuclear fuels are not considered as imported fuels in this ap-proach. In this study we consider nuclear fuel as that which it is, a fuel that is more or less com-pletely imported to the European Union. If nuclear fuel is considered as domestic energy source forthe EU-25, the total share of imported fuels would have been increased from 44% in 1990 to 50% in

the year 2004.

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4 Main driver economic and demographic drivers

Figure 7 indicates some of the key drivers for the economic and demographic develop-

ment which were considered for the scenarios. These assumptions were taken from therecent projections of DG TREN (2006). The main assumptions regarding population,gross domestic product (GDP) and the value added from the industrial sectors remainunchanged for the different scenarios. Only for the transport sector different assump-tions were considered in the baseline and the vision scenario which were derived fromthe assumptions on model shift, etc.

For the development of the population only a small increase is projected, in theperiod beyond 2020 a stabilization of the population in the EU-25 is assumed.

However, the number of households is projected to growth significantly, mainly

because of the trend towards smaller families and single households in manyMember States.

The growth of GDP in the period 2000 to 2030 is significant, the level of GDP,in constant terms, will be 80% higher compared with the 2000 levels.

The industrial production will increase significantly lower, which is based onthe assumption that major dynamics in the economic development of the EU-25will result from growth in the tertiary sectors.

A significant growth is projected for the transport activities. In 2030 the level ofpassenger transport activities will exceed the year 2000 levels by 50% and the

freight transport activities by 60%.

Figure 7 Economic and demographic drivers for the scenarios, 1990-2030

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1990 1995 2000 2005 2010 2015 2020 2025 2030

2000=1.0

Population

Households

GDP

Industry

Passenger transport activity

Freight transport activity

Sources: Eurostat, DG TREN, ko-Institut.

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5 Baseline and vision scenario

5.1 End-use sectors

5.1.1 Industry

The final energy consumption of industry was the main energy consuming sector in1990. With a share of 33% in total, final energy consumption industry was by far themost important sector compared to private households, tertiary sectors and transporta-tion.

In the decade between 1990 and 2000, this pattern changed. The energy consumed inthe transport sectors (including international aviation) was higher than in industry. Thisis mainly because the energy consumption in industry decreased from 333 Mtoe in 1990

to 312 Mtoe in 2000 and the energy consumption in all other sectors rose significantly.However, industry is still the largest consumer of electricity among the final energysectors. More than 40% of the total electricity consumed in the final energy sectorscame from industrial consumers. Industry also makes up the majority of fuel consump-tion in terms of final energy for solid fuels and for natural gas.

Figure 8 Final energy consumption by fuel in the EU-25 industry, 1990-2030

0

100

200

300

400

500

2010 2020 2030 2010 2020 2030

1990 2000 Baseline Scenario Vision Scenario

Mtoe

Heat

Electricity

Memo item

Others & waste

Geothermal

Solar

Gas

Oil

Hard coal

Lignite

Sources: Eurostat, DG TREN, ICE, ko-Institut.

In the baseline scenario, the final energy demand is projected to rise (Figure 8). Thetotal final energy consumption increases by 14% by the year 22030 compared to 2000levels. Whereas the consumption of solid fuels is projected to decrease further, the con-sumption of oil and natural gas is projected to moderately increase, by 15 and 12% re-

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spectively, and it is considered that the electricity consumption will rise by 34% in theperiod from 2000 to 2030.

The role of renewable energies in industry remains slight and amounts to 5.5% of total

final energy consumption in 2030.The vision scenario for the industry is based on four assumptions for the industrial sec-tors:

The structural change between energy-intensive industries and the other indus-trial sectors will significantly advance. In the baseline scenario, the share of en-ergy-intensive industries in the total industrial value added is 21% in 2030; inthe vision scenario, the contribution of energy intensive industries only amountsto 18%.

The energy intensity will improve slightly. Considering the fact that an im-

provement of energy intensity in many industrial sectors is seen as being be-tween 15% and 30% by 2030 in the baseline scenario, additional measures forimproving the energy efficiency could provide additional efficiency gains of 1%to 8% in 2030.

The use of renewable energies (mostly biomass) and waste will be tripled by2030.

The use of CHP in the industrial sectors will significantly increase by 2030.

The EU Emissions Trading Scheme will play a major role in creating additional poten-tial in energy efficiency. However, other focused policies and measures will uncover

and implement additional technical and organisational options. Regarding electricityconsumption, improved standards for electrical motors, pumps and pressured air instal-lations are crucial measures. Furthermore, the development of CHP at industrial sitesplays a crucial role. Whereas the use of heat from CHP plants only increases from 9 to14 Mtoe between 2000 and 2030 in the baseline scenario, the consumption of heat fromCHP plants rises to about 30 Mtoe by 2030 in the vision scenario.

The major differences between the baseline scenario and the vision scenario can besummarised as follows:

1. The trend of hard coal and lignite consumption in industry is not significantly

different in the baseline and the vision scenario.

2. The consumption of oil is more than 40% less in the vision scenario in 2030compared to the baseline scenario.

3. Compared to the levels of the baseline scenario, the consumption of gas is 17%lower in the vision scenario in 2030 and the demand for electricity is 18% lessthan in the baseline scenario.

4. The use of renewable energies (mostly biomass) and waste exceeds the levelsprojected for the baseline scenario by a factor of 2.4 in the vision scenario inthe year 2030.

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As key result of the vision scenario for the industry sector is, that the total level of finalenergy consumption is reduced by 8% in the vision scenario compared to the baselinescenario by the year 2030. The share of renewable energies (and waste) expands from5.5% in the baseline scenario in 2030 to 14% in the vision scenario.

5.1.2 Households

In contradistinction to the projected trend in industry, the final energy consumptionrises substantially in the baseline scenario. The total final energy consumption increasesby about 28% in the period from 2000 to 2030. Among the traditional energy carriers,the consumption of electricity represents the most marked increase. It is projected thatthe electricity consumption in households will reach a level 83% above the 2000 levels.The consumption of natural gas is also projected to rise significantly in this period, by

33%. The additional gas partly substitutes oil consumption in private households, forwhich a slight decrease is assumed in the baseline scenario. Solid fuels will only play aminor role for the time horizon of 2030 (Figure 9).

Figure 9 Final energy consumption by fuel in EU-25 households,1990-2030

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100

200

300

400

500

2010 2020 2030 2010 2020 2030


Mtoe

Heat

Electricity

Memo item

Others & waste

Geothermal

Solar

Gas

Oil

Hard coal

Lignite


The consumption pattern of the residential sector in the EU-25 is dominated by heating,cooling and cooking applications, which represent about 85% of the total final energyconsumption. Electric appliances and lighting only represent a share of less than 15% oftotal final energy consumption in private households. It is worth mentioning that abouthalf of electricity consumption in the EU-25 is used for different heating purposes andcooling at present.

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The following seven key assumptions characterise the alternative projection of the vi-sion scenario:

The energy efficiency standards for the construction of new buildings are be-

tween 25% and 30% stricter in 2030 in the vision scenario than in the baselinescenario.

In the vision scenario, 2.5 times more existing buildings are retrofitted in termsof energy efficiency during renovations than in the baseline scenario.

The share of electric space heating and electric hot water heating is significantlyreduced.

More efficient heating installations reduce the final energy demand for heatingpurposes.

A significant increase in heat supply from CHP and district heating plants.

More efficient electric appliances and installations and lighting systems lead to amore efficient use of electricity.

The contribution of renewable energies reaches a significant market share, espe-cially for heating and hot water (20% to 30%), and grows by 135% compared to2000, amounting to double the level of the baseline scenario.

As a result, the total final energy consumption in the vision scenario is stabilised at alevel that is 6% lower than the consumption in the year 2000, or 27% below the level inthe baseline scenario. The use of oil and gas for the residential sector is decreased by

50% or more during the period from 2000 to 2030. The increase of electricity consump-tion is limited to 16% above the 2000 levels or 60% below the consumption projectedfor the baseline scenario in 2030.

The use of solar energy for hot water and heating increases by a factor of 16 andreaches a share of 6% of total residential final energy consumption. However, the use ofbiomass, which doubles compared to the baseline scenario, provides nearly three timesthe amount of renewable energy in 2030 (16.5% of the total final energy consumption)compared with energy from solar heat. The total contribution of renewable energiesamounts to 22.5% of the total final energy consumption in the year 2030.

Last but not least, heat from CHP plants plays an increasingly significant role in theenergy mix for the residential sector. In the baseline scenario, the contribution of heat ismore or less stabilised at recent levels. By contrast, heat from CHP and district heatingplants doubles by the year 2030 in the vision scenario and represents a share of 23% ofthe total residential final energy consumption.

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5.1.3 Tertiary sectors

The tertiary sectors represent the non-industrial sectors of the economy, i.e. the energyconsumption from the service sector, the public sector, and from agriculture.

In accordance with the fast economic growth in the service sectors, the energy con-sumption of the tertiary sectors shows strong growth in the baseline scenario. Comparedto the 2000 levels, the total final energy consumption increases by 42% in the period upto 2030. Again, the increase in natural gas and electricity consumption is the most sig-nificant trend among the conventional fuels.

The electricity consumption rises by 76% by the year 2030 compared to 2000 levels,and the gas consumption expands by nearly 40% in this period. The consumption of oilis more or less stabilised in the coming decades; solid fuels only represent a minor shareof the total final energy consumption in 2030.

Figure 10 Final energy consumption by fuel in the EU-25 tertiary sectors,1990-2030

0

50

100

150

200

250

2010 2020 2030 2010 2020 2030


Mtoe

Heat

Electricity

Memo item

Others & waste

Geothermal

Solar

Gas

Oil

Hard coal

Lignite


The share of energy consumption for heating and cooling is about 20 percentage pointsless than in the residential sector. The use of electricity and some other specific energyuses (e.g. agriculture) amounts to about 30% of the total final energy consumption.

Taking into account the same measures as with regard to the residential sector, the totalfinal energy consumption of the tertiary sectors can be stabilised at a level of about 14%above the 2000 level in the vision scenario.

The potential for reducing electricity consumption is significant, but only constitutes

one third of the total consumption level in the baseline scenario. As a result, the elec-

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tricity consumption in the tertiary sectors is stabilised at a level 15% higher than in theyear 2000. The use of renewable energy (mostly biomass) increases significantly, reach-ing a share of 21% of the total final energy consumption in 2030.

5.1.4 Transport

The transport sector is the fastest-growing sector in terms of energy use. In the baselinescenario both the passenger transport and the freight transport activity is projected tocontinue to rise. After 2020, the energy demand slowly decreases as a result of en-hanced efficiency. In 2030, however, the energy use for transport is around 47% higherthan in 1990. A strong increase is especially assumed in the use of kerosene and jet fu-els, which is estimated at 34% above the level of consumption in the year 2000. Al-though the role of biofuels is increasing over time, their share in terms of the total final

energy consumption of the transport sector is not higher than 7% in 2030 (Figure 11).

Additional measures are required so that the transport sector fulfils its contribution toachieving significant higher CO2 emission reductions. In the vision scenario, three dif-ferent packages of measures were considered with regard to the fuel efficiency of pri-vate cars, changes in modal shift and transport avoidance together with the introductionof an emissions trading scheme for emissions from aviation, which could potentially belinked to the existing EU Emissions Trading Scheme.

More than half of the energy use in road transport stems from the demand of privatecars. It is therefore essential to realise the potential for energy efficiency gains of pri-

vate cars. Due to the close link between fuel efficiency and the CO2 emissions of vehi-cles, efficiency measures in the area of private cars has a significant influence on theCO2 emission levels of the transport sector. To enhance the fuel efficiency of cars, dif-ferent measures are taken into account:

Legislation for a CO2-emission target of new cars sold within the EU (80 g/kmin 2020);

Tax base of both registration taxes and annual circulation taxes directly relatedto the carbon dioxide emissions of passenger cars;

Amendment of the Car Fuel Efficiency Labelling Directive (1999/94/EC) in-cluding a comparing Labelling Directive as already exists for household appli-ances;

Incentives for the use of fuel efficient lubricant oils and tyres which allows for afurther reduction in fuel consumption; tyre pressure monitoring systems in newvehicles should be implemented as well;

The broad promotion of a fuel-efficient driving style combined with in-car de-vices which indicate the actual fuel consumption of the car to the driver.

To calculate the reduction potential in comparison to the baseline scenario, some as-

sumptions have to be made. According to the analysis from the TREMOVE project, the

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share of light duty trucks driving with gasoline is assumed to be 8% in the EU-15 and15% in the EU-10 (TML 2006). This results in diesel cars having a share of about 22%in the EU-25. The occupancy rate is projected at 1.6 persons per car.

A broadened comparing Labelling Directive and a CO2-related taxation of cars supporta faster stock exchange. Additionally, under the assumption that new cars have a highermileage than older ones, the specific CO2-emissions of cars in the stock allows theemission target to be reached 10 years later, i.e. the specific CO2-emissions in the carstock means that the 2020 target of 80 g/km is reached in 2030.

A strong focus on measures in changing the modal split by targeting public and railfreight transport with comprehensive efforts to avoid transport with a consequent liber-alisation approach of the railway system and major system investments to strengthen thecompetitiveness and the infrastructure of rail transport has to be implemented in strate-gies for measures in transport sector. Projections relating to these points were made

according to the Primes case Promoting rail and enhanced load factors 2004 (DGTREN 2004). It reflects a series of measures under the option C scenario of the Trans-port White Paper such as pricing, revitalising alternative modes of transport to road andtargeted investment in the trans-European network. The energy consumption in 2030would change as a result of the modal shift compared to the baseline scenario in thefollowing fashion:

The energy consumption of public road transport would increase by 11.5%.

The consumption of private cars and motorcycle would decrease by 12%.

The consumption of trucks would be reduced by 12.7%.

The energy demand of rail transport systems would increase by about 20%.

The role of inland navigation would increase, leading to an increased fuel con-sumption of 5.4%.

Air transport is the fastest-growing section in transport. Therefore, as an additionalmeasure, the introduction of an emissions trading scheme for aviation was assumed ac-cording to the high efficiency and high renewables scenario of DG TREN (2006); thisscenario is consistent with the existing analysis on the introduction of an emissions trad-ing scheme for aviation (Wit et al 2005). This new scheme could be potentially linked

to the existing EU ETS. The fuel consumption of national and international aviationwould decrease by 23% in 2030 compared to the baseline scenario. The share of biofu-els in transport sector in the baseline scenario is projected at about 4% in 2010, 7% in2020 and 8% in 2030. It is realistic that renewable energies will be much more stronglysupported in the transport sector. Supporting biofuels of the so-called second genera-tion, such as the conversion of biomass to transport fuels by gasification and thermo-chemical routes and the conversion of cellulose to sugars, is important. The advantagesof these kinds of biofuels are the unspecific feedstock and that their greenhouse gasemissions are clearly lower in the pre-chain than biodiesel from rapeseed or sunflowersand bioethanol from grain or sugar beet (i.e. by agriculture). It is envisaged that the sec-

ond generation biofuels will assume a 75% share. International quality-standards for

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the production of biofuels, including standards for imported fuels, are essential to ameans of introducing high shares of such fuels that is compatible with sustainability.The share of biofuels in the transport sector substituting gasoline and diesel in the vi-sion scenario reaches 5.75% in 2010, 18% in 2020 and 25% in 2030.

Figure 11 Final energy consumption by fuel in the EU-25 transport sectors,1990-2030

0

100

200

300

400

500

2010 2020 2030 2010 2020 2030


Mtoe

Electricity

Gas

Biofuel

Other petroleumproducts

Kerosenes - Jet Fuels

Motor spirit

Gas/diesel oil


Figure 11 also indicates the final energy demand in the transport sector for the visionscenario. The overall energy use in the vision scenario is reduced by about a quarter in2030 compared to the baseline scenario and by around 11% compared to the year 2000.

The level of renewable energies consumed in the vision scenario rises significantly to alevel which is double that of the level in the baseline scenario. The share of biofuels inthe total final energy consumption of the transport sector in the vision scenario amountsto 17% in 2030.

5.1.5 Total final energy consumption

As a summary of the sectoral scenario analysis presented in the previous chapters, thetotal final energy consumption results as follows (Figure 12):

In the baseline scenario the total final energy consumption increases steadily andreaches a level of 24% above the level of 2000 in 2030. In the vision scenariothe final energy consumption attains the level of 2000 again in the year 2030. Inthe years in between, the total final energy consumption is at a level between 2%

and 5% higher than in the year 2000.

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The structure of final energy consumption differs significantly between the base-line and the vision scenario. Whereas the consumption of oil is stabilised at re-cent levels and natural gas and electricity consumption rises significantly in thebaseline scenario, the consumption of oil and gas can be reduced significantly in

the vision scenario and the electricity demand is limited to a level that is 12%higher than in 2000 by the year 2030. Both the contribution of renewable ener-gies and of heat from CHP and district heating plants is more than doubled inthe vision scenario in the year 2030 compared to the baseline scenario.

Figure 12 Total final energy consumption by fuel in the EU-25,1990-2030

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250

500

750

1,000

1,250

1,500

2010 2020 2030 2010 2020 2030


Mtoe

Heat

Electricity

Memo item

Biomass & Waste

Geothermal

Solar

Gas

Oil

Hard coal

Lignite


The most important contribution to the decreased final energy consumption in the visionscenario is delivered by the transport sector, which assumes a 39% share. The secondmost important sector is the residential sector, which contributes 36% of the total final

energy savings. The industry and the tertiary sectors provide energy consumption reduc-tions which are considerably smaller but are still significant (9% and 16%, respec-tively).

However, for different energy carriers, varying patterns result between the sectors forthe changes in the vision scenario compared to the baseline scenario:

The total electricity savings by 2030 arise as follows: 41% from the residentialsector, 36% from the tertiary sectors and 23% from industry.

The reduction in gas consumption is broken down as follows: 60% from meas-ures in the residential sector, 24% from the tertiary sectors and 15% from indus-

try.

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The most relevant sector for oil savings is the transport sector. 64% of the totaldecrease in oil consumption stems from this sector (including international avia-tion). Private households deliver 17%, industry 11% and tertiary sectors 8% ofthe total reduction in oil consumption.

The increasing use of renewable energies is relatively evenly distributed amongthe sectors. 28% results from the tertiary sectors (which include agriculture),26% from private households, 25% from industry (including waste) and 21%from the increased consumption of biofuels in the transport sector.

The additional demand of heat from CHP and district heating plants arises asfollows: 53% from households, 31% from industry and 16% from the tertiarysectors.

Figure 13 Total final energy consumption by sector in the EU-25,1990-2030

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250

500

750

1,000

1,250

1,500

2010 2020 2030 2010 2020 2030


Mtoe

Transport

Services etc

Households

Industry


The significantly reduced electricity consumption and the extended heat consumptionfrom CHP and district heating plants create significant effects in the energy sectors (seechapter 5.2).

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5.2 Energy sectors

The energy sector is by far the largest consumer of primary energy in the EU-25. About50% of total primary energy supply is delivered to the different sectors of energy indus-

try. The most important of the energy sectors is power production. 38% of the TPES isconsumed by power plants. Some primary energies (e.g. lignite, nuclear, as well as hy-dro and wind) are almost completely consumed by energy industries.

Other energy sectors like district heating, refineries, etc. represent a share of about 11%of TPES and are much less significant for the energy industries compared to the powersector.

The net electricity production in the EU-25 rose by 34% in the years from 1990 to 2004.In the last four years of this period alone, power production in the EU-25 increased by10 percentage points, which equals approximately one third of the total growth from

1990 to 2004.

In the baseline scenario the strong growth in power production continues steadily. In2030, power production is exceeding the 2000 levels by 50%. However, the structure ofpower generation changes significantly in this period:

The level of nuclear power generation decreases by about 14%, which is equiva-lent to major lifetime extensions of existing nuclear power plants and/or stronginvestments in new nuclear installations. Against the background of the increas-ing total power production, the share of nuclear power drops from 32% in 2000to 18% in 2030.

Power generation from hard coal is more or less constant by the year 2020 andincreases substantially in the third decade. In total, the increase in electricitygeneration from hard coal amounts to 38% in the year 2030 compared to 2000levels. The total share of hard coal-based power production decreases onlyslightly from 21% in 2000 to 19% in 2030.

Electricity production from lignite is an important source of power production insome EU-25 Member States. However, it represented 9% of the total power gen-eration in 2000. For the following three decades, the power production shows anincrease of about 11% by 2030. The share of total power generation drops by 2

percentage points to about 7% in 2030. The power production from natural gas is assumed to double in the period from

2000 to 2030. The share of natural gas-based electricity generation expandsfrom 17% in 2000 to 23% in 2030.

Power production from renewable energies rises substantially. Compared to the2000 levels, the total electricity generation from renewable energy sources in-creases by a factor of 2.5 by 2030. The share in terms of the total power genera-tion increases by about 11 percentage points from 15% in 2000 to 26% in 2030.Whereas the production from hydropower plants increases only slightly, the

main growth results from the dynamic development of wind power and biomass.

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The power production from wind energy increases by more than 400 TWh from2000 to 2030; the electricity generation from biomass rises by more than 300TWh.

Figure 14 Development of the existing capital stock for power generation in theEU-25, 2000-2030

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2000 2010 2020 2030

TWh

0

250

500

750

1,000

MtCO

2

Power production from

existing (2000) plants

Fixed CO2 emissions from

existing (2000) plants

Source: ko-Institut.

The power sector is characterised by a long-living capital stock. If technical and eco-nomic lifetimes of 40 years and more are assumed for the exchange of the capital stock,the modernisation of the power sector constitutes a medium-term issue. Figure 14 showsthe development of electricity production from those power plants which already ex-isted in 2000. About one third of the power plant capacities which were producing in2000 will also be operated in the year 2030. This also has consequences for the CO2emissions from the power sector. 25% of the 2000 levels of CO2 emissions from thepower sector are more or less fixed for the time horizon of 2030 (Figure 14).

For the vision scenario, a couple of changes to some key policies and measures are as-sumed:

The allocation for new entrants in the EU Emissions Trading Scheme (EU ETS)is shifted from free allocation to new entrants based on fuel-specific benchmarksto an allocation approach leading to full internalisation of CO2 costs in the in-vestment appraisal (which is not the case in most of the EU-25 Member StatesNational Allocation Plans at the moment). This could be either an approach

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where no free allocation is provided to new entrants or a free allocation based onuniform benchmarks for power production (Matthes et al 2005).5

For the development of CHP, an active support policy is assumed which leads to

a steady increase in power production from CHP. The policies and measures arefocused on the increase of production from CHP plants for hard coal, natural gasand biomass. The overarching target is to double the recent levels of CHP pro-duction by the year 2030 against the background of considerably less growth inthe total power production.

Electricity generation from renewable energies increases substantially, by an-other 50% compared to the level reached in the baseline scenario by 2030.

The final consumption of electricity and heat determines the total net power and heatgeneration. The following factors are considered in the transformation of final energy

consumption to the net production of electricity and heat in the vision scenario: The electricity consumption of the energy sectors remains at a level of about 100

TWh in the EU-25.

The grid losses in the EU-25 network6 decrease from about 7% in 2000 to about5% in 2030, equalling total losses of about 140 TWh in 2030.

The electricity imports remain constant at the level considered in the baselinescenario, which amounts to about 25 TWh in the scenario period.

For heat from district heating network, losses of about 6% are considered in thescenario period.

The first significant difference between the baseline and the vision scenario is the sig-nificantly lower production level in the vision scenario, which results directly from theenergy efficiency gains in the end-use sectors. The total power production is stabilisedat a level of about 11% above the 2000 levels for 2010 and 2020 and a subsequent de-crease to a level of 7% above the 2000 levels.

Besides this difference in terms of production levels, major structural changes in powergeneration characterise the vision scenario (Figure 15):

Nuclear power generation is phased out according to the technical lifetime of the

plants if no other policies (e.g. in Germany, Belgium) expedite this process. In2030, the remaining power production from nuclear power plants amounts toabout 120 TWh, which equals a share of the total power generation of 4%.

Although some new investments in coal-fired power generation are considered,the level of electricity generation from coal decreases significantly. Compared to

5 For modelling of the impact of the EU ETS on the development of the power sector an allowanceprice was assumed which increases from 25 per EU Allowance (EUA) in 2005 to 27 /EUA in2030.

6 The relative grid losses are expressed as the share of grid losses in the total of net power production

and the net electricity imports.

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the year 2000 levels the hard coal-based power generation decreases by about70% and the production from lignite power plants drops by about 36%.

Compared with the 2000 levels, the power generation from gas rises by about

55%, which is 50 percentage points less than in the baseline scenario. Power production from renewables is extended to 1,300 TWh in 2020 and 1,700

TWh in 2030, which represents a share of 44% in 2020 and 59% in 2030. Com-pared to the baseline scenario, this equals a further expansion of power produc-tion from renewable energies by 500 TWh in 2030. The main contribution to thegrowth of renewable energies in power production comes from wind energy,which expands to about 730 TWh in 2030 (440 TWh in the baseline scenario).In 2030, about 52% of total wind power generation results from offshore instal-lations. Electricity generation from biomass reaches a level of 400 TWh in 2030(compared to 350 TWh in the baseline scenario). 57% of biomass-based power

generation is produced from wood and wood waste, 26% from biogas and 17%from waste. CHP plays an important role in power production from biomass.Biomass-fired CHP plants represent 18% of the total CHP production in 2030.Solar and geothermal power delivers only a small share of the total electricityproduction from renewable energies. In 2030, the share of solar and geothermalenergy amounts to 140 TWh and 70 TWh, respectively.

Total power generation from CHP plants rises from 420 TWh in 2000 to 930TWh in 2030 and represents a share of 32% in 2030. In terms of absolute pro-duction levels, this is 10% less than in the baseline scenario, but 5 percentage

points more in terms of the share of total electricity generation.

Figure 15 Net electricity generation in the EU-25, 1990-2030

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500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2010 2020 2030 2010 2020 2030


TWh

Biomass & Waste

Geothermal

Solar

Wind

Hydro

Gas

Oil

Lignite & brown coal

Hard coal

Nuclear


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The fuel input to district heating plants doubles in the vision scenario, from about 20Mtoe in 2000 to 40 Mtoe in 2030 in accordance with the increasing demand for heatfrom CHP plants and district heating plants. The fuel input for district heating plants isdominated by natural gas with an increasing share of biomass over the scenario period.

The energy consumption by the other energy sectors is based on the High Efficiencyand High Renewables Scenario of DG TREN (2006). The consumption of these sectorsis about 10 Mtoe for hard coal and natural gas and about 80 Mtoe for oil in 2030 whichis (in total) 30% lower than the levels in the year 2000.

However, compared to the changes in the power sector, changes as regards the con-sumption level and fuel structure in the district heating and other energy sectors are ofmuch less importance.

The introduction of carbon dioxide capture and storage (CCS) was considered as an

supplementary option. If CCS would be available on a broad commercial basis, all newcondensation power plants commissioned from 2020 to 2030 could rely on CCS tech-nology. These plants represent a power production of about 230 TWh and the total CO 2emissions avoided by CCS amount to 105 Mt CO2 by the year 2030.

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5.3 Primary energy supply and CO2 emissions

The total primary energy supply is calculated from the final energy consumption andthe energy use in the energy sectors. The non-energy use of primary energies is ex-

cluded from the totals and the analysis below.

Following the general trends in the final energy consumption and the energy sectors, theprimary energy supply in the baseline scenario increases steadily by the year 2020 andis more or less constant after 2020. In 2030, the TPES is 17% higher than in 2000. Thetrends regarding the structure of TPES can be divided into two main groups:

The contribution of nuclear, coal and oil is only subject to small changes interms of their level of supply. The supply of nuclear energy drops by 14% in thescenario period, the contribution of lignite decreases by 18%, the supply of hardcoal increases by 7% and the total oil consumption expands by 5%.

The primary energy supply from gas and renewable energies shows muchstronger dynamics, but is limited by the low base level in 2000. The consump-tion of natural gas rises by 32% and the contribution of renewable energies in-creases by 160% in the period 2000 to 2030.

As a result, the structure of TPES changed significantly because of the increased supplylevels and different trends in the structure of primary energy. The contribution of coaland oil decreases slightly, by 2 and 4 percentage points respectively. The share of nu-clear shrinks to 11% in 2030 and the contribution of gas increases from 23% in 2000 to26% in 2030. The contribution of renewable energies is extended from 6% in 2000 to

13% in 2030.

Figure 16 Total primary energy supply in the EU-25, 1990-2030

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1,750

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2010 2020 2030 2010 2020 2030


Mtoe

Biomass & Waste

Solar & Geothermal

Wind

Hydro

Gas

Oil

Hard coal

Lignite

Nuclear


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In the vision scenario, the TPES can be stabilised at the 2000 levels between 2010 and2020 and is decreased to 13% below the 2000 levels by 2030. 7 When the structure ofprimary energy in the vision scenario is considered, the following trends shall be high-lighted:

The contribution of nuclear energy decreases by about 86% in absolute termsand by 12 percentage points in terms of the structure of total primary energysupply.

The role of coal is significantly decreasing in terms of both the overall level ofsupply and the share of the TPES. In 2030 the level of coal consumption is 63%lower than in 2000. The decrease of hard coal consumption is more significantthan the drop in lignite use. In 2030, the share of coal in the TPES is 8%, whichis 11 percentage points below the share in 2000.

The use of oil is about 40% less than in the year 2000. The share of the TPESshrinks from 39% in 2000 to 27% in 2030.

Even for the total consumption of gas, the level of consumption decreases com-pared with the 2000 levels. In 2030, the consumption of gas is 9% less than in2000. However, the share of gas in the TPES rises from 23% in 2000 to 24% in2030.

The most significant change in terms of consumption levels as well as shares inTPES must be considered for renewable energies. From 2000 to 2030 the totaluse of renewable energies increases by 485% and reaches a share of 39% in theTPES. The most important contribution in terms of renewable energies resultsfrom the massive increase of biomass by the year 2030.

The major differences in the structure of primary energy supply lead to significantchanges in the role of energy imports to the EU-25. In 2000, the share of imported ener-gies amounted to about 60%. In the baseline scenario, this share is growing to 74% in2030. In the vision scenario, the share of imported energies decreases to 49% in thesame period, assuming that all bioenergies are supplied from EU-25 sources. If a sig-nificant role of international trade is assumed with regard to biomass and biofuels, thetotal share of energy imports in the vision scenario is slightly higher (57% in the case of30% bioenergy imports and 53% in the case of a 15% import share, respectively).

However, although the share of the total imported energy differs significantly betweenthe baseline and the vision scenario, the import share for the fossil fuels does not greatlydiffer. The nuclear fuel must be imported completely and the share of imports for hardcoal is 75% in the baseline scenario in 2030 and 77% in the vision scenario. The share

7 It should be highlighted that the reduction in total primary energy supply is partly a result of thestatistical treatment of renewable energies and the decreasing role of nuclear energy. Whereas therelation between power production and fuel input is assumed to be 0.33 for nuclear power (modernfossil power plants reach 50% or more), the electricity from hydro, wind and solar is translated intoprimary energy using the factor 1.0. The reduction of primary energy resulting from this statistical

definition is only a statistical artefact.

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CO2 emissions from power production and district heating also constitute - at 36% - themajor share of total emissions in 2030.8 However, the strongest emission increase is tobe found in the transport sector, for which the share of the total CO2 emissions increasesfrom 21% in 1990 to 28% in 2030. CO2 emissions from transport rise by 12% from

2000 to 2030. Much higher dynamics result from aviation. The total emissions fromkerosene and jet fuel use increase by about 34% in the period from 2000 to 2030. In2030, CO2 emissions from aviation constitute a share of the total energy-related CO2emissions of 4.6%.

Figure 18 CO2 emissions from energy in the EU-25, 1990-2030

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2010 2020 2030 2010 2020 2030


MtCO2

Transport

Tertiary sectors

Households

Industry

Other energy sectors

Power generation &

district heating

Sources: Eurostat, DG TEN, ko-Institut.

In the vision scenario, the energy-related CO2 emissions decrease significantly, reach-ing a level of about 29% under the 1990 emissions in 2020 and about 39% under the1990 levels.

Not only the emissions level changes drastically in the vision scenario, but also the

structure of emissions. In 2030, the share of emissions from transport is - at 31% - verysimilar to the share of the power and district heating sector (33%). The most significantemission reduction results from power and the residential sector. Compared to the levelsof 2000, the emissions from private households decrease by about 58% by 2030, equal-ling an emission reduction volume of 265 Mt CO2. In the same period, the emissionsfrom power and district heating production drop by 40%, which equals about 530 MtCO2.

8 All data referred to in this chapter indicate direct emissions. Emission reduction by increased effi-ciency in electricity or heat consumption are accounted for in the power and the district heating sec-

tor. For a differentiation of emission reductions by sector of origin, see chapter 5.5.

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5.4 Total greenhouse gas emissions

For other greenhouse gases than CO2, the emission trends refer to data given by therelevant literature (EEA 2006) or other surveys (WI 2005). The most comprehensive

database on the range of future emission projections can be derived from the GAINSproject of IIASA (2005a+b+c).

In the baseline scenario, the non-CO2 emissions decrease significantly by the year 2010and are more or less stabilised after this date. A small increase in the total non-CO2emissions results from HFC, PFC and SF6 in the period from 2010 to 2030.

The most significant contribution results from the strong decrease in methane emis-sions, which amounts to 200 Mt CO2-equivalent (CO2-e) from 2000 to 2030. However,in the same period the emissions of HFC, PFC and SF6 rise by at least 135 Mt CO2-e.

Figure 19 Non-CO2 emissions in the EU-25, 1990-2030

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2010 2020 2030 2010 2020 2030


MtCO2e

HFC, PFC & SF6

Nitrous oxide

Methane

Sources: EEA, IIASA, ko-Institut.

In the vision scenario, a rather rough estimate constitutes the basis of the scenario. It isassumed that 80% of the reduction potentials provided by IIASA (2005a+b+c) will beimplemented over time.9As a result, the total non-CO2-emissions is reduced by about

9 With regard to methane, the following groups are taken into account: increases in agricultural pro-ductivity, increased feed intake, changes to more non-SC in diet, replacement of roughage for con-centrate, etc (IIASA 2005a). In respect of nitrous oxide sectors, the following options are included:selective catalytic reduction in industrial plants, process modification in fluidised bed combustion,optimisation of sewage treatment, replacing use of N2O as anaesthetics, and optimised application offertilizer (IIASA 2005b). Regarding HFC, PFC and SF

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